Correlation Between Eni SPA and Parex Resources
Can any of the company-specific risk be diversified away by investing in both Eni SPA and Parex Resources at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Eni SPA and Parex Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eni SpA ADR and Parex Resources, you can compare the effects of market volatilities on Eni SPA and Parex Resources and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Eni SPA with a short position of Parex Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eni SPA and Parex Resources.
Diversification Opportunities for Eni SPA and Parex Resources
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between Eni and Parex is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Eni SpA ADR and Parex Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Parex Resources and Eni SPA is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Eni SpA ADR are associated (or correlated) with Parex Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Parex Resources has no effect on the direction of Eni SPA i.e., Eni SPA and Parex Resources go up and down completely randomly.
Pair Corralation between Eni SPA and Parex Resources
Taking into account the 90-day investment horizon Eni SpA ADR is expected to under-perform the Parex Resources. But the stock apears to be less risky and, when comparing its historical volatility, Eni SpA ADR is 1.9 times less risky than Parex Resources. The stock trades about -0.24 of its potential returns per unit of risk. The Parex Resources is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest 926.00 in Parex Resources on August 29, 2024 and sell it today you would earn a total of 124.00 from holding Parex Resources or generate 13.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eni SpA ADR vs. Parex Resources
Performance |
| Timeline |
| Eni SpA ADR |
| Parex Resources |
Eni SPA and Parex Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eni SPA and Parex Resources
The main advantage of trading using opposite Eni SPA and Parex Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eni SPA position performs unexpectedly, Parex Resources can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Parex Resources will offset losses from the drop in Parex Resources' long position.| Eni SPA vs. TotalEnergies SE ADR | Eni SPA vs. Ecopetrol SA ADR | Eni SPA vs. Shell PLC ADR | Eni SPA vs. Petroleo Brasileiro Petrobras |
| Parex Resources vs. Petroleo Brasileiro Petrobras | Parex Resources vs. Equinor ASA ADR | Parex Resources vs. Eni SpA ADR | Parex Resources vs. YPF Sociedad Anonima |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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